Please help/1004c Plans & specs

[prasercat]

Got a contract/invoice for purchase of MH. A cost breakdown from general contractor for placing it, site improvements and preparation. I have evidence for the borrower's land purchase cost. The last time I did a MH, it was 2 years ago and I was an apprentice. Did it on a 1004. The 1004C questions are simple but don't understand applicability in this case; specifically, regarding contract: contract price, did you analyse the manufacturers invoice... What I have is a plans and specs deal and a contract to purchase personal property (the MH), so I don't think these sections should be fill out.(just NA) and in the price field put (Construction Loan or equivalent). I can mention these items in an addendum, etc., rely on comp sales for the land value and an estimation using Marshall & Swift for the cost value of the property. There is no contract for the whole deal, so this section appears irrelevant. Is this the common procedure? I don't know why this isn't explained the FHA 4151.2D, just the obvious stuff. So, if I put the contract price of just the MH purchase on page 1, it transfers to the sales grid sales price (how dumb is that, like they are always the same freakin concept!) So, this leads me to believe its not applicable. Its the grain of sand in the shoe, that's what's urks!

 

[CANative]

First things first. Is this an FHA appraisal?

I don't know why this isn't explained the FHA 4151.2D, just the obvious stuff.

Did you mean 4150.2? The protocol is in, of all places, the valuation protocol (Appendix D). You can download from HUDClips. It's the attachment to ML2005-48.

HUD requirement for the manufacturers invoice is about the same as fannies. On new construction, new purchase, etc, the appraiser is required to review the manufacturers invoice (that is, the invoice from the company that built the MH and sold it to the dealer...) It sure used to make them grumpy when you asked for this documents.:Eyecrazy:

Manufacturer’s
Invoice • Applies only to new construction (initial sale from manufacturer). Mark the appropriate box and explain the results of the analysis (terms and conditions) of the manufacturer’s invoice or why the analysis was not performed.
• If the invoice is not available, the appraiser is to note the unavailability.
Retailer’s Name • Applies only to new construction (initial sale from manufacturer). Provide name of retailer or distributor who sold unit.

 

[CANative]

The last time I did a MH, it was 2 years ago and I was an apprentice. Did it on a 1004.

The 1004C addendum which preceeded the 1004C form came out in 2003 I believe... more than 5 years ago. It was a required addendum to the 1004 when appraising MH's.

Are you also familiar with all the other FHA requirements for proposed construction? Like getting the builders cert. etc.?

4-3 NEW AND PROPOSED CONSTRUCTION REQUIREMENTS
Before performing an appraisal for new or proposed construction,
the appraiser must have the plans and specifications and a fully
completed Builder's Certification. The lender must provide this
information to the appraiser prior to issuing the assignment.
Without these items, the property will not be acceptable for FHA
insurance purposes.
A. NEW CONSTRUCTION
The appraiser must develop the cost approach for new
construction less than one year old. Appraise new
construction in the same way that existing properties are
valued under the specifications outlined in this chapter of
the Handbook. Also, consider using the Gross Rent
Multiplier method when developing the income approach for
three- or four-unit buildings.
B. PROPOSED CONSTRUCTION
Appraise proposed construction consistent with the
methodology presented in this chapter. USPAP requires that
the appraiser be provided with written specifications of the
proposed structure. Specifically, the Lender must provide
the appraiser with these documents:
o builder's plans, specifications and construction
documents
o completed builder's certification (Form HUD-92541)
4-4
4150.2
(4-3) o Builder's Warranty (Form HUD-92544)
o the 10-year Warranty, when required (the Secretary has
proposed a 1-year Home-Owner Warranty period)
o all reports and information available (i.e. sales
agreement, title report, environmental assessments or
studies and inspection reports)
> If these documents are not provided, return the
incomplete appraisal to the lender. Check the box
stating that the valuation is subject to completion and
that the value is contingent on the structure receiving a
certificate of occupancy.

 

[prasercat]

First things first. Is this an FHA appraisal?

It could have been, so the info on MH FHA Proposed construction is important to me. The valuation protocol (star-date 4150.2 Appendix D) mostly regurgitates the obvious info with few fine details about possible scenarious or much about proposed construction in a comprehensive way. Its just with MH, its been almost never in my coverage areas. The processor wants a 1004C plans & specs for a conventional construction loan. Processor may change to FHA appraisal upon completion and upon final inspection (the essence of her email to me); however, she stated that 9 out of 10 it will end up with conventional permanent financing. Here's some detail I came up with not found in the protocol: If it goes FHA, still do a 442 final inspection for the construction loan; I'll secure the builder certification, 1 year warranty, and data plate and certification label info from the MH with new appraisal, new effective date, new construction (not plans and specs), check comps again, and re-reconcile if necessary, verify site 1 info on the builder certification. Seems to me I will be doing this thing over like I was given the order to do an FHA MH appraisal in the first place; however, since the prop. is now finished, its now new construction not plans and specs. When I apprenticed, I did a MH-FHA plans and specs on a 1004 and then did a compliance inspection report with an attached VC sheet and married the two reports together- not very applicable now (nor then?).

Question: Am I on the right track with these previously unpublished and uncensored tedious details or am I going down down down the ring of fire.

 

[prasercat]

On new construction, new purchase, etc, the appraiser is required to review the manufacturers invoice (that is, the invoice from the company that built the MH and sold it to the dealer...) It sure used to make them grumpy when you asked for this documents.

When you use the term and as it appears on the form (New construction). In the past 5 years of appraising, I have always used this term to apply only to a new house that is in existance and completed. The "New purchases" applies to my situation, but there no "new construction" only plans and specs. So I take it then, once the loan is approved, the manufacturer builds this MH and at that time a "manufacturer's invoice" is created. So in Plans and Specs, there is no manufacturers invoice to review and discuss. So the point of analysis and the question on the 1004C is to see if there is an excessive mark up or charges from the dealer, which I've read elsewhere in this forum is typically 30%. I'll remember to get this item when the MH has been completed. Have I nailed it yet? I appreciate your help very much.

 

[Ray Miller]

The question that jumps out to me is what type of MFG are you talking about. HUD Code, Moudlar, Park Model, Panneltized????

If it is HUD code and been ordered per plans and specs, there is an invoice somewhere on the cost FOB Factory. You just have to dig for it.

The second question is your SOW, just what type of loan is this for conventional or FHA?? My feelings are this needs to be spelled out in your contract for services and or Fee Agreement and the scope of work.

I feel FHA is a bit different in the SOW of work required and pays a bit better, so I would want to be sure I have this nailed in my agreements. If it turns out to be an FHA later, then that is another appraisal for a different lender. So be it they will need to pay the fiddler for playing at two different dances.

 

[Jo Ann Meyer Stratton]

Because a manufactured home is constructed to the HUD code and only specific models with specific changes that have been pre-approved by the applicable inspection agency the manufacturer's invoice to the dealer is the "plans and specs". As Ray asked what is the intended use and intended user of the appraisal report? If FHA it will be subject to an inspection by a licensed engineer for the installation and foundation to meet FHA requirements. If convention it will be subject to installation and foundation meeting local and state requirements. Both reports would be subject to the home that is installed is as described in the manufacturer's invoice and dealer's invoice (dealer's invoice should list the type of installation and skirting or separate contracts would need to be provided). You should obtain both invoices, also get a copies of the floor plan and standard features sheet. Any differences between the standard features sheet and the manufacturer's invoice will appear as additional charges on that invoice. For example if the additional features sheet states that vinyl flooring and typical carpet is included, the additional charge on the manufacturer's invoice would be for the upgrade to ceramic tile and upgraded carpet. If panelized walls are standard for that model, then upgrade to drywall interior will be a charge on the manufacturer's
invoice.

Your report would be on the 1004C, serial numbers and maybe the HUD label numbers will be on the manufacturer's invoice and dealer's invoice depending on what state the home has been completed in the factory. If they are there on the invoices enter that info on the 1004C with a statement that they will be verified after home has been installed on site. Use the square footage from the floor plan along with another statement that the livable area will by verified by field measurements after the home is installed. The report will be subject to completion per plans and specs. After everything is done and the home is complete you will need to go the subject property, measure the home that has been installed, take photos and notes of the HUD labels, data plate and any other insignias you discover as well as exterior and interior photos. If they did what said they did then a 1004D is completed for conventional or for FHA a Compliance Inspection Report. The underwriter would also have to obtain an engineer's report after installation to determine if the foundation and installation meets FHA requirements. Both reports has to be in the binder the lender submits to FHA to obtain the FHA insurance.

Review Manufactured Home section of Appendix D of Mortgage Letter 2005-48--which spells out what is needed for completion of the 1004C.

 

[prasercat]

......the manufacturer's invoice to the dealer is the "plans and specs". As Ray asked what is the intended use and intended user of the appraisal report?

Firstly, I greatly appreciate all the input and assitance here, I consider it my personal debt to others in this forum and to help out as well. The local general contractor submitted to me his cost breakdown for the install of the double wide on perimeter foundation (with a crane) and site work, when we discussed the prop. at the site. The dealer's invoice came from the lender. Between delivery to the site of the MH double-wide (personal property at that point), the work of the local general c. and with land purchased by the borrower (and contracts for that), I have all the ingredients for a Plans & Specs. The dealers invoice indicates what is their "base price" for that model and then options/upgrade sheets and then signed contracts (one for the MH + delivery(that was option) and a signed addendum for an additional upgrade/modification (such as no flooring, since the buyer will have the GC do it with materials not offered at the dealer), the cost breakdown of these items and total and signature of the buyer. What everyone seems to tell me is that there is at this point a "manufacturer's invoice" that exists between the dealer and the manufacturer that I'm supposed to have and review in this Plans and Specs appraisal for a proposed property of a MH that (as I understand it) hasn't been ordered yet (The builder told me it would be ordered upon approval of the conventional contruction loan). So, I should now call the dealer to get a copy of this invoice from the manufacturer, are you sure about this??
As Ray pointed out, if the permanent financing subsequent to completion is going FHA, then I'm starting all over again like this plans and specs never happened (well perhaps not with complete amnesia) with a whole new SOW, with a commensurate fee for a new FHA appraisal (perhaps slightly discounted) and with all the necessary ingredients: data plate, certification label, builder's cert, 1 year warranty, manufacturer's invoice, some of which I would have obtained in the final 1004D inspection (combined with an FHA inspection for new construction) for the FHA permanent financing)

 

[Jo Ann Meyer Stratton]

There would typically be only one appraisal report completed for the first assignment. Yes, you need a copy of the manufacturer's invoice to the dealer--see the last question in the contract section of the 1004C. That appraisal report would be completed "subject to". If a FHA assignment, then their guidelines apply--the lender and FHA/HUD as the intended user and the intended use is for assisting FHA/HUD in determining whether the meets the Minimum Property Requirements for an FHA insured loan. If FHA/HUD is the intended user, do not use the 1004D when the installation is complete. The HUD Compliance Inspection Report would be used for only the items you as the appraiser has the knowledge and expertise for. Yes they did install a 28' x 66' Cavco with ceramic tile floors, drywall interior, etc, etc, etc (whatever they said they would do). Then the underwriter has to obtain an inspection report from a licensed engineer regarding whether the installation and foundation meets the requirements in HUD's Permanent Foundation Guidelines or not. You will not be involved in that phase.

If the loan is conventional, the appraisal report and property is subject to being in compliance with local and state requirements. When completed per plans and specs you would complete a 1004D and for your own safety check with what ever local authorities will be issuing the Certificate of Occupancy--just like you do with a site built home. That approval by the local authorities is all that Fannie Mae and Freddie Mac require.

Normally there would not be two separate appraisal reports completed--just like a site built home has one report "subject to". Although there are two separate assignments, the first is reported on the 1004C and the second is reported either on the CIR or 1004D--the second assignment is not reported on the 1004C. Unless it is over four to six months and they install a completely different model of home without telling you until you appear to do the "final". Then you call the client, explain the problem and plan your next step.

 

[prasercat]

Although there are two separate assignments, the first is reported on the 1004C and the second is reported either on the CIR or 1004D--the second assignment is not reported on the 1004C.

One last question. If I'm constrained to just supplementing the Plans & Specs with the CIR, which doesn't have any place to put the data plates (its a double wide) and certification label info, would you just include that in an addendum to the CIR (I don't think I would want to open up the P&S appraisal, insert the info where I have put TBD, put in the FHA case number, new intended users, change and re-sign, which to me would require a new effective date and re-appraisal). Anyway, If I'm submitting, it seems that it would be best to make the CIR an attachment to the first appraisal and send it all to the lender as one PDF.

I think the idea with making it a "new FHA appraisal" is that the intended use/users will change, because the P&S was created for a conventional loan (the loan officer stated that there is a 10% chance it would go FHA for the permanent loan after the conventional construction loan). Assuming the lender want me to "convert" the appraisal to an FHA (that was the language used) upon inspection. I will then secure the FHA case#, and all those items required of FHA new construction - its seems I'm hitting all the bases if I (in essence) start anew.